The Financial Conduct Authority has introduced new rules bringing environmental, social and governance rating providers into UK regulation for the first time, with the aim of improving transparency and confidence in the information used by investors.

The framework introduces requirements covering transparency, governance, systems and controls, conflicts of interest, and engagement with users of ESG ratings and the organisations being assessed. The FCA said the rules are designed to improve the reliability and comparability of ESG ratings, helping investors make better-informed decisions. They will apply to firms and organisations providing ESG ratings and assessments in the UK market, with requirements proportionate to their size and activities.

Providers will need to apply for FCA authorisation from 24 June 2027. The new regime will take effect on 29 June 2028, from which date firms carrying out regulated ESG rating activities in the UK will need the relevant FCA permission, unless an exemption applies.

The regulator has published final rules and guidance to help organisations establish whether their activities fall within scope and prepare for the new requirements. It will also provide webinars and access to its pre-application support service.

Laura Dawes, director of authorisations and sustainable finance at the FCA, said: “Trusted information is essential for well-functioning markets. These rules will help improve transparency and raise standards across the ESG ratings market while supporting competition, innovation and growth. Firms should check now whether they are in scope and start preparing for authorisation. We’ll continue to provide practical support to help them prepare.”

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